Reforming the Shareholder’s Derivative Suit in Nigeria: Perspectives from the United States

Gogo G. Otuturu, Ayebaesin J Beredugo


The shareholder’s derivative suit was developed by courts of equity as an exception to the majority rule. It provides opportunity for a minority shareholder to bring an action in the name and on behalf of the company to redress wrongs done to the company by directors who are in control. This paper examines the shareholder’s derivative suit in Nigeria under the Companies and Allied Matters Act 1990. It highlights the procedural obstacles and financial burdens on the shareholder and suggests that the requirement of notice on the directors should be excused in cases of fraud and illegal transactions by the directors. It also suggests that, a derivative action being a corporate action initiated by the shareholder in the name of the company and on its behalf, the company should be made to bear not only reasonable legal fees but also all the expenses connected with the proceedings.

Keywords:  derivative suit, majority rule, management control, minority rights

DOI: 10.7176/JLPG/94-12

Publication date: February 29th 2020

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ISSN (Paper)2224-3240 ISSN (Online)2224-3259

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